You Might Be Paying Too Much for Medicare—Without Even Realizing It

Key Takeaways

• Many Medicare beneficiaries pay more than necessary due to overlooked costs, delayed enrollment penalties, and poorly matched plans.

• Evaluating your actual healthcare usage and understanding Medicare’s cost-sharing rules can help you avoid overspending.

The Real Cost of Medicare Can Sneak Up on You

When you think about Medicare, you may assume your costs are predictable or even minimal. After all, you paid into the system throughout your working life. But in 2025, that assumption could cost you. Between rising premiums, overlooked deductibles, and the nuances of Medicare rules, many Americans are paying more for their healthcare than they should—and often, without even realizing it.

You may have signed up for Medicare assuming it would take care of most of your expenses. And while it does cover a broad range of services, it’s not as comprehensive—or as cost-effective—as it might appear on the surface.

Let’s take a closer look at where hidden or unexpected costs show up and how you can take control of your Medicare spending this year.

1. You’re Still Paying for Part A—Sometimes

Most people assume Medicare Part A is free. In reality, that’s only true if you or your spouse worked at least 40 quarters (10 years) and paid Medicare taxes. If you don’t meet that work history, Part A in 2025 can come with a hefty monthly premium—hundreds of dollars, depending on your situation.

Even if you qualify for premium-free Part A, that doesn’t mean it’s truly costless. You’re still responsible for:

• A $1,676 deductible per benefit period

• Daily coinsurance costs if you’re hospitalized more than 60 days

• Skilled nursing facility coinsurance if your stay extends beyond 20 days

These numbers add up quickly if you experience a major health event or need extended care.

2. Part B Premiums and IRMAA Catch Many Off Guard

In 2025, the standard monthly premium for Medicare Part B is $185. But if your income is above a certain threshold, you may have to pay more due to the Income-Related Monthly Adjustment Amount (IRMAA).

This surcharge is based on your Modified Adjusted Gross Income (MAGI) from two years prior—so in 2025, Social Security looks at your 2023 tax return. If you’ve had a life change like retirement or a reduction in income since then, and haven’t reported it, you could be paying higher premiums unnecessarily.

IRMAA affects both Part B and Part D, potentially inflating your costs significantly. It’s worth reviewing your income and filing a reconsideration request if you qualify for a lower bracket.

3. You Might Be Missing Out on Help with Drug Costs

Even with the new $2,000 out-of-pocket cap on prescription drugs under Part D in 2025, you might still be paying more than necessary.

Some issues include:

• Selecting a plan that doesn’t cover your medications well

• Not using a preferred pharmacy network

• Not enrolling in the Medicare Prescription Payment Plan, which allows you to spread costs over time instead of paying all at once

Additionally, you could qualify for Extra Help (the Low-Income Subsidy), but not apply because you assume you’re ineligible. Even modest savings from this program can make a difference.

4. Delaying Enrollment Can Trigger Penalties

If you missed your Initial Enrollment Period (IEP) or didn’t sign up for Part B when you were first eligible—and didn’t have credible coverage—you might face a lifetime late enrollment penalty.

• The Part B penalty adds 10% to your premium for every 12-month period you were eligible but didn’t enroll.

• The Part D penalty adds 1% of the national base beneficiary premium for every month without credible drug coverage.

Both penalties last as long as you have Medicare—making them a permanent, and costly, mistake.

5. Not Coordinating with Employer or Retiree Coverage

Many retirees keep employer or union coverage after turning 65. But if you assume that coverage replaces Medicare, or that you don’t need to enroll, you could end up paying both:

• More out-of-pocket because Medicare didn’t pay its portion

• Late enrollment penalties if your employer coverage wasn’t considered credible

You should confirm with your benefits administrator how Medicare coordinates with your current plan to avoid gaps or double payments.

6. Not Having Medicare Part B When You Should

Some people delay enrolling in Medicare Part B because they’re still working or covered under a spouse’s plan. That’s perfectly fine—as long as the coverage qualifies as credible under Medicare rules.

However, if your insurance doesn’t meet the criteria and you delay Part B enrollment, you could be left paying for:

• Uncovered services

• Higher premiums for life due to late penalties

Check every year that your other coverage meets the test, especially if your employment or insurance status changes.

7. Assuming Medicare Covers Long-Term Care

Medicare only covers short-term skilled nursing or rehab care—not custodial long-term care in a nursing home or assisted living. That includes help with activities like bathing, dressing, and eating.

Without long-term care insurance or substantial personal savings, you may find yourself paying thousands of dollars out of pocket for services you assumed were covered.

8. Choosing a Plan That Doesn’t Match Your Needs

Whether you opt for Original Medicare or a Medicare Advantage plan, choosing the wrong coverage can cost you in ways that don’t show up immediately.

You could be paying too much if:

• Your plan has a narrow network and you see out-of-network providers

• You don’t use included supplemental benefits, essentially paying for things you never use

• Your plan’s copayments and coinsurance don’t align with how often you visit doctors or specialists

A plan that looks affordable upfront might not be cost-effective based on how you actually use healthcare.

9. Missing the Annual Enrollment Period

Each year from October 15 to December 7, you can make changes to your Medicare coverage for the next calendar year. If you skip this window or don’t review your options, you could remain in a plan that no longer suits your needs or costs more than necessary.

Even minor adjustments in plan formularies, copays, or coverage rules can impact your bottom line. Take time each fall to compare your options.

10. Not Understanding Medicare Cost-Sharing

Medicare is not free healthcare—it’s cost-sharing. You are responsible for:

• Deductibles for Parts A, B, and D

• Coinsurance amounts (such as 20% of the Medicare-approved amount for outpatient services under Part B)

• Copayments depending on your plan

You might think your plan covers everything, but without reviewing your Summary of Benefits or Medicare & You handbook, it’s easy to underestimate your total liability.

Staying Informed Helps You Spend Less

Avoiding these cost traps begins with awareness. Medicare is complex, and even small misunderstandings can lead to significant, ongoing expenses. But there are practical steps you can take right now:

• Track your healthcare usage annually and compare it with your plan coverage

• Verify the credibility of your other insurance coverage

• Revisit your plan during open enrollment

• Ask about eligibility for programs like Extra Help or Medicare Savings Programs

You Deserve the Right Medicare Strategy in 2025

Paying too much for Medicare isn’t about being careless—it’s about how complex the system can be. But you don’t have to figure it out alone. A personalized review of your current plan, your healthcare usage, and your eligibility for support programs can save you money not just this year, but every year going forward.

If you’re unsure whether your current coverage is right or think you’re spending too much, it’s time to get guidance. Speak with a licensed agent listed on this website to explore options that truly fit your needs—and your budget.